S&P Global Downgrades Paramount Skydance Credit Rating Ahead of Warner Bros. Merger
Following its merger with Warner Bros. Discovery, which is valued at nearly $111 billion and anticipated to finalize in September 2026, subject to regulatory approvals, S&P Global Ratings plans to lower Paramount Skydance's credit rating from 'BB+' to 'BB'. Paramount is expected to assume approximately $30 billion in net debt from Warner Bros. Discovery. S&P forecasts a leverage ratio of 7.6x for 2026, not falling below 5x until 2029, due to integration risks and macroeconomic conditions. While cost synergies are projected to exceed $6 billion, they will only be acknowledged once realized. The merger is under regulatory scrutiny in Europe and may face antitrust issues, including those from California's Rob Bonta. Paramount Skydance has also proposed an exchange offer for WBD's junior-lien notes, with a preliminary 'BB' rating for the proposed second-lien secured notes.
Key facts
- S&P Global will downgrade Paramount Skydance credit rating from 'BB+' to 'BB' after Warner Bros. Discovery merger closes.
- Merger enterprise value is nearly $111 billion, expected to close September 2026.
- Paramount assumes ~$30 billion in net debt from Warner Bros. Discovery.
- S&P projects leverage ratio of 7.6x for 2026, not below 5x until 2029.
- Cost synergies estimated at over $6 billion, but only counted when realized.
- Combined company includes six legacy operations: Time Warner, Discovery, Scripps, CBS, Viacom, Skydance.
- Layoffs expected from linear TV consolidation and corporate overhead reduction.
- Regulatory approval pending in Europe; California AG Rob Bonta reviewing for antitrust.
Entities
Institutions
- S&P Global Ratings
- Paramount Skydance
- Warner Bros. Discovery
- Time Warner
- Discovery Communications
- Scripps Networks
- CBS
- Viacom
- Skydance
- NFL
- Variety
Locations
- California
- Europe